The Paradox of Choice, and Trusts: A Potential Hazard?

A different perspective on Wealth 3.0 and trust administration

This post is the second in a series where I explore implementation of the principles of Wealth 3.0 - particularly the structuring of trusts that practically address the specific needs, wants, desires, and challenges of beneficiaries by meeting them where they might be at any given time. Before diving in, I encourage you to read my first article.

Now, to caveat - before I was an attorney I wanted to be a motivational speaker. I have hundreds, if not thousands, of pages I have written for self-help books which were never completed. I bring that up to warn you that this article will be outside of the usual technical scope of my writing, and will be my first foray into publishing something more personal.

Paradox of Choice and the Conscious Mind

Now, before we get started, I want to throw out some additional caveats - I am not a high net worth individual, nor have I even been in that category. While I have observed the struggles of clients, I personally have not experienced the struggles that accompany wealth. What I have experienced, however, is a modern human condition - an ever-expanding wealth of convenience, coupled with an also-expanding paradox of choice. We live in a time where, from an entertainment, consumption, and relationship perspective, most of society in the developed world has access to a wealth of choices. Streaming video, smartphones, online ordering, and just-in-time delivery allow a significant portion of the earth’s population to satisfy their every whim within a reasonable (but also-expanding, due to inflation) budget.

This sounds great in theory, but as we are starting to see, its application is flawed. It turns out that having too many choices, and/or too much convenience, tends to paralyze us and create a fear of missing out (FOMO) or a fear of wasted effort (FOWE - which is my own creation as far as I can tell). Now, I anticipate that some readers will push back on how the research I linked and cited is flawed - but ironically, this exact reaction is proving my point. There is such a breadth of information and authority or opinion to cite, that it is impossible to be objective about anything other than the possibility that a paradox of choice exists.

Alas, I’m not here to debate the question of whether or not too many choices or too much information leads to inaction and/or discontent. Instead, I’m here to add to the morass in an area where I do not believe there is enough information - practical solutions to this problem for high net worth families, who are attempting to create transfers of wealth that will help mitigate FOMO/FOWE for inheritors in the rising generation.

Wealth 3.0, particularly Kristin Keffeler’s book The Myth of the Silver Spoon, calls for advisors and inheritors to collaboratively address our negative money beliefs and baggage. And, from my perspective, a significant item of “baggage” when it comes to money is the paradox of choice. With enough wealth, you can call your shots and carve out whatever destiny you want. In fact, if you ask what people want, I would bet you find this outcome at the end of the path of their dreams - the “freedom” to do whatever they want, when they want, without having to answer to anybody. And while it is viewed as privileged and rare to have enough monetary wealth and social/hierarchical power to achieve this freedom, we are seeing in real time the effects of other forms of wealth (in the form of convenience) on the human psyche.

Can a correlation be drawn between a wealth of assets/status, and a wealth of convenience? If one truly has the choice to do what they want, when they want, will they actually ever make a choice? This question may be answered by a peek into the subconscious.

Paradox of Choice and the Subconscious Mind

While the general problems of money are not new, their current circumstances and framework are new, novel, and untested. I have a theory, which I have not researched, but which I think also illustrates how the paradox of choice now uniquely affects the subconscious mind - sometimes through a lifetime of programming and influence outside of family and peers.

If we look at Generation X, they are the first generation to have been raised their entire lives having access to visual entertainment in the form of television. If we look at Millennials, they are the first generation to have been raised their entire lives having access to computers and video games. And, for some members of Generation Z, they have been raised their entire lives having access to cellphones (which evolved into smartphones), social media, and streaming media. And, going the other way, members of the Baby Boomers and the tail end of the Greatest Generation have seen a shift from the suffering and anxiety of The Great Depression, World War II, and Cold War eras to perhaps the period of the greatest prosperity (at least from a convenience perspective) the world has ever seen. But, for all individuals, our ideas of prosperity often are not lived, but instead are observed - not in real life, but through visual media.

While our conscious mind recognizes a paradox of real and practical choices, I would venture to guess that a lifetime of visual media exposure creates a paradox of choices that are not actually rooted in reality. When you are exposed to a world of possibilities that transcends the vagaries of everyday life for entertainment value, it tends to dull both the real world and (counterintuitively) the imagination. The outcome is a growth of FOMO/FOWE for anything that does not lead to the imagined fantasy life, which in reality is not actually imagined but instead serves as an amalgam of the stories one has consumed visually. When possibilities are endless both consciously and subconsciously, the human brain appears to struggle with meaning, identity, and even the traditionally (but increasingly less) bright line between fantasy and reality.

Another effect that is often not given enough acknowledgement is the creation of a hypothetical “they” in one’s mind. This “they” is often cited as justification for one’s self-limiting beliefs and inability to make a choice, due to the fear of being criticized by or not stacking up to “them".” If asked to define who “they” are, often an individual may project “their” identity onto a parent, boss, or other influential figure in their lives, but I would venture to guess that this projection is just the mind’s way of dealing with another paradox of choice - the egocentric fear that there are millions, if not billions, of people in the world who would not approve of one’s choices or identity. I further believe that social media has become so toxic because it has become the real-life projection of “they.”

(And, when I mention that imagination is counterintuitively blunted by visual media exposure above, perhaps it is this hypothetical “they” which also drives this blunting of the imagination.)

So, what can we do for inheritors in the rising generation of high net worth families and business owners, to shore up this ever-increasing effect of FOMO/FOWE and the paradox of choice from both a conscious and subconscious perspective? How much leeway do we give beneficiaries to “test” who they are, and what they want and need, before enough is enough? How do we strike a balance between the pursuit of happiness, and aimless wandering in the wilderness? What behaviors can we reward and discourage, and can we give teeth to the rapidly-disappearing interaction of rewards and deferred gratification?

While I don’t have answers to these existential questions, I do have ideas, which ironically can be one solution - just not in the way that might be apparent. This article presents the first idea, which is a changing of the way we approach and implement ideas.

Flexing the Idea Muscle

Soon, I will be covering a separate macroeconomic issue - where does investment capital come from for continued economic growth in the future, when the capital is tied up in trust (and subject to duties of diversification and prudent investment)? While this warrants its own separate discussion, it is helpful to view trust assets through the lens of investment in the trust beneficiaries themselves. This is, after all, the end goal of a focus on human capital as advocated by Jay Hughes and many others. But, this investment in “self” becomes infinitely more difficult when multiple “selves” are involved, each with an ever-increasing world of choices. It is also complicated when the risks of this investment collide with a risk-averse vehicle - the trust.

That issue aside, it helps to illustrate the narrowing of one’s aperture when it comes to the ideas and possibilities that lead to choice (or inaction, which is its own choice). When you can derive meaning from the actual pursuit of ideas, while also not fearing or acknowledging the loss of possibilities of other ideas, the effect on happiness can be profound. While this is not a one-size-fits-all solution, it does show the counter-issue: that to balance a world of growing choices, families and advisors must also consider a broad list of ideas. The question is, whose ideas are being given the greatest weight, and what dynamics lead to the assumption/outcome of this weight assigned to ideas?

To that end, collaborative discussions about ideas between family members (especially the rising generation) and advisors are helpful at all levels. These discussions can be a collective extension of the family meeting, or individual discussions between younger family members and those who are guiding them, or will guide them. Often, meetings both within a family and a corporate setting take on an air of brainstorming ideas. But, for meetings (on an individual or family level) to have value beyond just brainstorming sessions for ideas, there must be some form of follow-up. Ideas are not enough - they must morph into action items, the action items must be carried out, and (where investment in ideas by a trust or others is involved) there must be some sort of accountability.

Now, the emotional impact of ideas (coupled with a wide array of possibilities, from a media-saturated subconscious mind) often disincentivizes the conversion of ideas into action. When shared, ideas are often judged as winners and losers, thus creating a reluctance to share. But, it is this lack of social sharing that may further limit beneficiaries. This social sharing has shifted from an in-person environment, to a crowdsourced virtual environment - which can create wildly unpredictable and inaccurate outcomes (in essence, a real-life representation of the hypothetical “they” discussed above). So, creating a framework to share and test ideas in-person is a great first step.

This framework of idea-sharing should consider a phenomenon that often goes unacknowledged. The more time an individual spends alone ruminating on an idea, the greater the chance that the individual grows emotionally attached to the idea. The idea itself morphs into something that makes the individual feel good - it becomes a security blanket - and conflict is then created when the individual’s idea is challenged as a “loser.” This dynamic also creates a fear of testing the idea, as there is a risk that the reality of the idea (especially an idea that fails) will not align with the good feelings generated by ruminating on the idea. This can also be a fear of accountability - not wanting to hear “I told you so” from a hypothetical “they” - with respect to the idea.

This is where practical guidance can come into play, both in the creation of ideas and conversion of ideas into reality. Examples in this vein can be found in the works of James Altucher, who generally advocates for the exercise of the “idea muscle” through a repeated habit of brainstorming, writing down ideas, and then pre-judging the winners and losers (which becomes easier based on sheer volume).

The facilitation of this process for members of the rising generation can be extremely valuable - especially to short-circuit the process of growing emotionally attached to ideas. This short circuit can be seen as the confluence of three factors - reducing the opportunity for (emotionally-driven) rumination on the idea, the volume of alternate ideas that the individual has available, and the extent to which these ideas are written down as opposed to just living in the individual’s head. In a world of unlimited choices, it is easy to develop limerence for one big idea if there is not a concerted counter-effort to create a visual map or list of all ideas.

In other words, as silly as it sounds, the act of writing down the universe of choices can lead to a meaningful narrowing of those choices. And, the act of sharing these choices and getting outside perspectives can further narrow the choices.

But, short-circuiting the cycle of rumination and limerence may not be enough. While taking action to pursue, test, and implement ideas is helpful, it does not create the end of the story. In fact, while we are examining the “end” of the story, we must also examine how ideas are selected as winners and losers - by the “end” of the pursuit. In other words, the human brain often assigns greater weight to results than process, and the ability to perfectly predict results is often given greater weight than the actual impact of those results.

A fear of an idea being judged is often a fear of judgment of, or accountability for, the end result, possibly coupled with the inadequacy felt when the anticipated results cannot be controlled or perfectly predicted. What if instead we can change our rubric for examining ideas? Shifting focus from results to process can be extremely empowering for an individual. Falling in love (or limerence) with the process increases the chances that an individual will follow through on an idea, even if it becomes apparent early on that the actual results of the pursuit might not align with the expected results.

In this vein, I appreciate the guidance found in the works of Charlie Hoehn. Charlie has recognized, above all, that we are not in this alone - the process of pursuing ideas cannot always be an individual pursuit but instead requires us to collaborate strategically. In his book The Recession-Proof Graduate, Charlie outlines how he used his love of video editing to strategically build relationships with prominent authors, in lieu of “getting a job” in a post-recession economy where opportunities for traditional employment were scarce for inexperienced graduates. Charlie goes on to counter-balance the burdens and anxiety of success in these endeavors with his books Play it Away and Play for a Living, which encourage a spirit of play both in the process of collaboratively pursuing ideas, and in (individually or collaboratively) de-stressing from these pursuits.

Abstract Goals Versus Concrete Solutions for the Family and Trustees

Within a family, there is often a tension between those who have it all figured out, and those who seem endlessly adrift. Yet, neither side is objectively right - they just have incompatible worldviews and frames for the roles wealth plays in their lives. This is where the paradox of choice comes back in. The more choices we have, the more likely we are to fall into these opposing camps of those who are certain versus those who are adrift. Both camps, however, share a similar insecurity and fear about the ever-expanding list of choices available, without recognizing one common ground - action and inaction are both choices, and it is possible to root one’s identity in each choice.

While identity is a bit outside of the scope of this discussion, it is perhaps the greatest metric for the “effectiveness” of using trust assets to invest in a beneficiary. But, to arrive at this outcome, there has to be some sustainable progress down a chosen course. And, for progress to be sustainable, it has to be enjoyable at least some of the time. But, where identity is attached to the destination and not the progress down a path to the destination, the progress may not be sustained. The individual in such a situation may find themselves like the proverbial hare, who is eventually caught and passed by the tortoise.

So, while the goal is fairly abstract - developing the desire for the process above the result, possibly to the level where an individual’s sense of well-being is derived from the process and not potential or past results - it can be helpful to use a concrete process to arrive at this outcome. This is where I see the future role of the trust, and trustee, coming into play. Keep following along, as I will continue to develop more guidance on this front.

From a family systems perspective (which is outside of the scope of this article), perhaps the greatest goal of a trust’s investment in a beneficiary can and should be the differentiation of the beneficiary. To get there requires doing the work, however, and differentiation can no longer be considered within the family bubble. There is a broad, and sometimes made-up, system of influence and choices outside of the individual beneficiary from which the individual beneficiary must also differentiate themselves. And, this process starts with shining light on choices, converting them to ideas, and collaboratively re-thinking the meaningful action to implement those ideas that most resonate with the individual from the perspective of process instead of results.